CLOSE CONTROL URGED

Poverty Bay Herald, Volume LXIII, Issue 19127, 23 September 1936, Page 8

CLOSE CONTROL URGED

FIXED TRUST SCHEME BRITISH COMMITTEE'S PLAN LONDON, Aug, 13. Far-reaching recommendations to protect small investors in Fixed Trusts ore made by the Committee set np by the Board of Trade last March to inquire into tho movement. The- main conclusions of the committee, of which Sir Alan Anderson was chairman, given in its report, issued last night., wore : The movement is one which should bo controlled but not prohibited. Dangers incidental to it cannot, be eliminated by legislation.

There should be control of Unit Trusts similar to that imposed under the Companies Act. It is emphasised that even if all the committee's recommendations are adopted, they will not supply a complete safeguard against the possibility that managers of such Trusts may make illegitimate profits at" the expense of those investing in them. HOLDERS'' VOTING RIGHTS Amqng tho main recommendations of the committee are : Every Unit Trust, to lie registered and the managers of Trusts to file with tho registrar documents and information relating to the constitution and management of the Trust. Deposit should be made with the Pay-; master-General by the managers in re- : spect of each Trust managed by them. . The sum suggested by the committee is ; £20,000. Full accounts should be left with the registrar and made available to unitholders. Units and sub-units should be transferable, but transfer should be .liable to stamp duty. Offers for sale should be accompanied by full particulars of constitution and operation of Trust. Investors should bo given a contractnote with specified particulars: and buyers should bo given full particulars of the constitution and operation of the Trust. Unit-holders to have voting rights and power to call a meeting and initiate investigation into conduct of Trust. The. Council of the Association of Fixed and Flexible Trust Managers issued a statement last night welcoming tho Committee's proposal for legislation to .safeguard investors. £50,000,000 INVESTED It is estimated that £50,000,000 of public money has gone into "Fixed" or "Flexible" trusts since the movement began in this country five years ago. A Fixed Trust, is a trust in which the management, engages itself to invest the money received from, the public only in a limited and specified list of securities. If docs not issue shares, but "units" or "sub-units." Every buyer of Fixed Trust "units" or "sub-units" knows that his and his fellow-purchasers' money is invested in a fixed list, of stocks and shares whose names he knows and whose position he can follow. Of far older standing are what are called "Managements Trusts." Such trusts issue shares to the public, which are dealt in on the Stock Exchange, and the managers or directors use their own | discretion as 16 how, where, and when to liu'V or sell securities.

In lh,e past low months many now trusts have boon formed wliicli are neither "Management'' nor "Fixed." To these, the epithefc "Flexible"' is applied. This means that while the directors publish a list of securities beyond which they will not operate, thev retain the freedom to buy and sell at their own discretion, any or all of the securities named.